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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: kech who wrote (132837)	1/19/2004 4:10:50 PM
From: Andrew N. Cothran	Read Replies (2) \| Respond to of 152472

My most desirable method is to sell current month options two or three days before expiration day. I look for an option either slightly in the money, at, or near the strike price. I also look for options on stocks with high daily volume and price swings of about a dollar during a normal trading day. I also look for options with high open interest (especially call options). When I find one (QCOM is a good example), I then hope for a buying spurt that carries the stock to its daily high. I then check the target option. If I can sell an option at or in the money for a dollar plus change, and if the stock is trading at its high for the past several days (having a swing pattern of a dollar or more during a trading day, I will then sell the option on the premise that the stock price will be brought back to or just under the strike price on expiration day. Again, QCOM is a good example. Look at its trading pattern for the three days prior to Friday's expiration. Look at the high volume buying on Thursday morning that carried the stock to about $61. The January 60 option followed the stock up and could have been sold at $1.00 or $1.20. Since I own QCOM (long term hold), I sold the January 60 option for $1.00. As you can see from your review, QCOM closed Friday at $59.70 or thereabout. The high on Friday was $59.98, this high during the last 30 minutes of trading (goal line stand!) The option expired worthless. So, you misinterpreted my earlier post. I sell current month options two-three days before the current month option expiration. The prior month has nothing to do with it. The prior month options have already expired with the current month being the nearest option available for trading. Sorry if I confused you. I hope my above explanation clears things up. Good trading to you. PS: I always trade covered options, never uncovered. If I don't own the stock, I don't sell the option. I never sell puts. Nor do I buy them.